UPDATE E FOR IN INVE VESTOR ORS 6 July ly 2020 20 1 - - PowerPoint PPT Presentation

UPDATE E FOR IN INVE VESTOR ORS

6 July ly 2020 20

C O N T E N T S

Introduction Portfolio update Valuation overview

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COVID-19 response

1 2 3 4

Extremely difficult operating environment has continued: economic activity has declined substantially in the wake of severe lockdown initiatives, low confidence and productivity levels and weak private sector investment COVID-19 crisis has materially affected many of the portfolio companies’ short-term profitability and resulted in sharp declines in peer group multiples… …significantly impacting the value of the unlisted portfolio (-17%) and Brait (-53%) in the quarter ended 31 March 2020 Ethos Capital’s NAVPS at 31 March 2020: R8.91 (using Brait’s NAV) and R6.65 (using Brait’s share price) The focus of the funds and Ethos Capital has been on value and liquidity preservation and strategies to position each portfolio company for a post COVID world Recent disposals of Iceland and DGB demonstrate traction on the execution of Brait’s new strategy of focusing on maximising value through the realisation of its portfolio over the next three to five years

P e r f o r m a n c e a n d o u t l o o k

Overvie view w of the last ast six months nths and outlook look

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C O N T E N T S

Introduction Portfolio update

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COVID-19 response

1 2 3 4

Valuation overview

C O V I D - 1 9 r e s p o n s e

COVID ID-19 9 respon

• nse

se: : What at have we done?

Key focus on business continuity, liquidity requirements, cost-saving initiatives, solvency and engagement with lending banks WEEK EEK THREE+ EE+: LENDE DERS & EXITING TING LOCKDO KDOWN WEEK EEK TWO: LIQUIDI IDITY STRES RESS-TES ESTING TING WEEK EEK ONE: BUSINES INESS CONTINU INUIT ITY Y PLANS NS

Portfolio companies assessed against a Business Continuity Framework to ensure that best practice implemented across Financial, Operational, Commercial, HR & Legal levers Stress testing the impact of a total / partial loss

• f revenue on free cash flow in each portfolio

company, pre and post management cash and cost savings initiatives Ongoing monitoring of liquidity & cash flows, engagement with lending banks regarding liquidity, solvency & debt support for the businesses and planning for exiting lockdown

Ethos developed a Business Continuity Plan (‘BCP’), providing our portfolio companies with a framework to ensure that their businesses remain a going concern through this period of crisis (i.e. lockdown & economic disruption) This framework of 55 questions was compiled by considering:

• a. Best global practice in a crisis environment
• b. Individual COVID-19 responses from each of the portfolio

companies, presented to the respective Boards Each portfolio company was assessed against this framework to identify gaps in their response plans. In addition, this allowed for cross-learnings between portfolio companies

• 350
• 150

50 250 LTM

• 10%
• 20%
• 30%
• 40%
• 50%
• 60%
• 70%
• 80%
• 90%
• 100%

% of revenue lost

Impact of revenue on 3 month FCF

FCF (3 months) Available facilities

• 80%
• 60%
• 40%
• 20%

0% 20% 40% LTM

• 10%
• 20%
• 30%
• 40%
• 50%
• 60%
• 70%
• 80%
• 90%
• 100%

% of revenue lost

FCF pre and post initiatives

Pre initiatives Post initiatives

Liquidity stress-testing focused on free-cash-flow at various levels of revenue decline; pre & post management initiatives to cut costs / generate cash – and available facilities This provided an indication of: – The split between fixed and variable costs

• The highest impact cost-saving levers identified

through this analysis include salaries, rental and third- party debt repayments – The level & timing of funding support required (debt/equity)

• Output included in a heat map that is reviewed daily by

the COVID-19 crisis management team Key to determine where shareholder support is required and prioritise where this should be provided MONITOR – Continue to monitor cash-flow and available liquidity through daily crisis-meetings ENGAGEMENT WITH LENDERS – Where liquidity support is required, proactive engagement with the lending bank is essential – Engage gemen ment t with third-party party lenders ers is focused ed on:

• Assessment of short-term liquidity needs (3 months)
• Determining optimal sources of funding
• Review of refinance risk
• Medium-to-longer term covenant positions
• Engagement on capital and interest restructures /

delays, where applicable EXITIN ING G LOCKDOWN – Focus has now shifted to how our portfolio companies will

• perationally exit lockdown; including what an immediate
• vs. a gradual exit from lockdown would mean

– As part of this process, management teams have started working on the assessment of longer-term working capital requirements (i.e. ‘start-up’ capital) in order to resume

• perations

EXAMPLE: Liquidity stress test output; FCF at various levels of revenue decline FINANCIA IAL & LIQUID IDITY ITY 14 Question

• ns:

cost rationalisation, available liquidity, engagement with banks, key KPIs & salary/staff cuts COMMER ERCIAL 10 Question

• ns:

engagement with customers, retention strategies, lease agreements & business rationalisation OPERATIO IONAL 7 Questions

• ns:

supply chain, keeping work force operational, dynamic shift models, leveraging automation, training on new SOPs LEGAL & INSU SURANCE 4 Questions

• ns:

cybersecurity, regulations, insurance coverage, legal implications of force majeure actions HUMAN RESOU OURCES 5 Questions

• ns:

Leave policies, managing staff working from home, identifying key personnel and high- risk employees GENER ERAL 15 Question

• ns:

intensify hygiene measures, travel bans, quarantine procedures, WFH policies, postpone non-essential events

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C O V I D - 1 9 r e s p o n s e

COVID ID-19 9 respon

• nse

se: : What at are we f focu cusi sing ng on over r the next quarter? r?

Focus has shifted to exiting lockdown and resetting balance sheets & management incentives to ensure long-term sustainability WEE EEK K FOUR+: +: PREPARING FOR THE ‘NEW NORMAL ’

KEY PRIOR ORIT ITY FOCUS AREAS FOR THE PORTFO FOLIO IO OVER THE NEXT QUARTER 1. Liquidity management and monitoring 2. Balance sheet restructure post crisis 3. Preparing for the ‘new normal’ 4. Management team incentive structure Continued ed liquidi dity ty manageme ement: t: – Daily monitoring of liquidity with focus on liquidity levers: rent deferral, UIF TERS support for employment costs, Section 189 processes (where required) Managing capital tal allocati ation: : – A framework has been developed that assesses each company on a set of quantitative and qualitative measures, applying a weighted score to each specific measure. This will allow us to score each company and rank the portfolio when assessing the attractiveness of injecting additional capital Balan ance e sheet t restru ructu ture res: s: – Top-to-top meetings with key lending banks; these presentations included an overview of each portfolio company, the impact of COVID

• n valuations and our current view on liquidity /

debt support required – Currently focused on delaying balance sheet restructures as far as possible in order to determine the sustainable earnings level post- crisis and in so doing ensure sustainable capital structures across the portfolio Portf tfolio Compa pany y Manageme ement t incentives: es: – Working to develop a loose framework for management incentives; ensuring alignment through a difficult and uncertain period

HOW W WAS THE PORTF TFOLIO LIO POSITIO ITIONED ED PR PRE-COVID ID AND D HOW W HAS IT BEEN N IMPACTED ED BY THE E LOCKDO DOWN? N?

57% 57% 33% 33% 10% 10% < 2.5x 2.5 - 3.5x > 3.5x 54% 54% 29% 29% 17% 17% Yes Partial No

Net debt to EBITDA DA pre-CO COVID VID (Feb)

Splits based on 2020Q1 NAV

Abili ility ty to contin tinue e tradin ding g durin ing g lockd kdown

Splits based on 2020Q1 NAV

While the majority of Ethos Capital’s portfolio (54%) has been operational during lockdown, there are certain businesses that are still unable to

• perate; most notably Virgin Active and

Ster Kinekor Theatres Going into the COVID crisis, the Ethos Capital portfolio was relatively ungeared, with 57% of the portfolio at a net debt / EBITDA less than 2.5x and an average leverage ratio of 1.6x. 6

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C O N T E N T S

Introduction Portfolio update

7

COVID-19 response

1 2 3 4

Valuation overview

5% 1% 1% 1% 2% 2% 2% 4% 5% 5% 6% 7% 9% 9% 13% 28% Other MTN Chibuku Ster Kinekor Twinsaver TymeBank Iceland Gammatek Primedia Kevro Synerlytic Vertice Premier Echotel Virgin Channel Vas

82% % of total al assets ets

53% 53% 38% 38% 9% 9%

South Africa Rest of sub-Saharan Africa International

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P o r t f o l i o u p d a t e

Total l ass assets ts contrib tribution ution at at 31 March ch 2020 20

Portfolio company updates in the following slides focus on the eight largest contributors (82% of total assets)

P o r t f o l i o u p d a t e

Portf tfolio

• lio update

ate: Channel l VAS

Channel VAS has continued to perform strongly with FX devaluation being the biggest risk

Date of investme ment nt Oct 2018 % of EC Inve vested Capital 28% Total Etho hos owne nershi hip 20.0% Current valua uation R523m / 1.43x TMB EC Invested Capital R388m L9M Retur urn +R112m Strong growth in profitability was offset partially by currency depreciation in the valuation

Channel VAS is a leading provider of Airtime Credit Services (“ACS”) to prepaid mobile subscribers and has expanded into Micro Finance Services (“MFS”) leveraging its existing credit scoring capability and access to data

Company ny upda date te: – Channel VAS has continued to perform strongly with increasing ACS advances and new deployments across a number of territories Impa pact ct of COVID ID-19: 19: – The COVID-19 crisis has not had a significant direct impact on the business’ operating performance, with ACS lending volumes in key regions showing resilience despite the economic downturn. However, lockdowns have limited customers’ ability to recharge (i.e. no vendors selling scratch-cards) which has impacted ACS advances across some

• geographies. In response to the drop in recharges, Channel VAS has adjusted their credit scorecards and the business is monitoring defaults on a daily basis

– The biggest risk to the business is the devaluation of emerging market exchange rates, particularly given the exposure to the Nigerian Naira and the South African Rand Outlook: – Channel VAS is monitoring the deployment of new products and new market entry carefully in order to manage defaults. The business is currently evaluating a modified risk- share model in order to support consumers during this time – The business continues to experience strong demand for its products and is focused on enhancing operational efficiencies across its platform Valua uatio tion: n: – Strong growth in underlying profitability was “normalised” for a potential devaluation in local currencies against the US$ (most notably the Naira)

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P o r t f o l i o u p d a t e

Portf tfolio

• lio update

ate

Date of investme ment nt May 2018 % of EC Inve vested Capital 7% Total Etho hos owne nershi hip 86.3% Current valua uation R135m / 1.20x TMB EC Invested Capital R112m L9M Retur urn +R20m Date of investme ment nt Apr 2019 % of EC Inve vested Capital 6% Total Etho hos owne nershi hip 95.0% Current valua uation R109m / 1.20x TMB EC Invested Capital R91m L9M Retur urn +R5m

Vertice sells medical technology and supplies across a wide range of applications predominantly to support emergency and critical procedures

Company ny upda date te: – Vertice’s business is expanding well and a number of bolt-on acquisitions have been concluded at attractive prices – The COVID-19 crisis resulted in a slowdown in revenue as many elective procedures have been delayed due to public and private hospitals banning non-emergency

• procedures. However, the company expects volumes to recover over the months post

lockdown given the underlying medical need for these operations – The negative effect on revenue is being partially offset by selling supplies that have experienced stronger demand due to the crisis – Much of the cost base is variable and the business is not likely to experience liquidity problems unless the lockdown continues for an extended period Valua uatio tion: n: – Limited impact on maintainable EBITDA (reduced slightly for Q3 valuation purposes) and multiple unchanged

The Synerlytic group operates in subsets of the Testing, Inspection and Certification market

Company ny upda date te: – As a non-essential service provider, the imposition of the lockdown resulted in a cessation of trading for a significant portion of the Synerlytic business – During this period, a number of cost saving measures were implemented, with management’s business continuity plan focused on cash preservation and the company’s near-term liquidity requirements – The phased relaxation of the lockdown measures has meant that the entire group is now fully operational once again, with the majority of its customers having come back

• nline

Valua uatio tion: n: – Slight reduction in maintainable EBITDA, multiple unchanged in Q3 valuation

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P o r t f o l i o u p d a t e

Portf tfolio

• lio update

ate: Virgi gin n Activ tive

Virgin Active has been significantly impacted by COVID-19 however gyms have started to reopen in Italy and Asia Pacific

Date of investme ment nt Feb 2020 % of EC Inve vested Capital 13% Total Etho hos owne nershi hip 10.1% Current valua uation R246m / 0.42x EC Invested Capital R583m Valuation based on Brait share price as at 31 March 2020 of R3.75 per share

Virgin Active is one of the leading international health club operators and strives to provide customers with a combination of outstanding exercise experiences and a world class digital offering

Company ny upda date te: – Virgin Active achieved a strong operational performance up to February 2020 with a 3% year-on-year increase in its membership base and EBITDA ahead of budget Impa pact ct of COVID ID-19: 19: – Virgin Active has been significantly impacted by COVID-19, with the closure of all clubs globally from 2nd – 25th March as part of governments’ initiatives to limit the spread of the

• virus. All memberships were frozen at the point of closure, with members not being charged any fees throughout the closure period

– A broad range of mitigating actions have been taken to preserve liquidity and reduce cash outflow by 2/3rds during the closure period. This includes rent deferrals / reductions, government support, salary cuts and capex delays – In addition, Safety Plans have been put in place for each territory to ensure compliance with government guidance and regulatory requirements with a specific focus on customer engagement to outline new club usage rules, minimise churn and encourage membership retention and utilisation – Virgin Active has secured £50m of additional funding in the UK / Europe and APAC business (£25m from shareholders and Virgin Enterprises Limited (as licensor) and £25m from the banking syndicate) and the South African business has sufficient liquidity based on its current projections for the lockdown Outlook: – Italy reopened 5 clubs on 20th May, with 20 further clubs opened on the 25th May and the Milan region opened on 1st June. Thailand reopened on 2nd June, Australia from 13th – 22nd June and Singapore on 25th June. While the opening of UK and South African clubs is still to be determined, Botswana opened 22nd May and Namibia 2nd June – Where clubs have reopened, there has been a positive response from members (61% usage relative to prior year in the first clubs reopened in Italy)

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P o r t f o l i o u p d a t e

Portf tfolio

• lio update

ate: Echo ho

Echo continues to deliver good performance with growth of its services across select SSA countries remaining the key strategic focus

Echotel is a corporate Internet Service Provider, providing Information and Communications Technology (”ICT”) services through an aggregation of third-party networks

Company ny upda date te: – Echo continues to deliver good performance and growth in the company’s sales pipeline remains strong, with the demand for corporate ICT solutions increasing as a result of the pandemic and many people working from home Impa pact ct of COVID ID-19: 19: – Echotel services a broad customer base spanning a number of industries in different regions – As an essential services provider in the geographies in which it operates, the group continues to trade despite the lockdowns instituted due to COVID-19 Outlook: – Echo is using this period to evaluate and selectively invest in and scale the network further. This is in pursuit of potential opportunities as the industry faces some disruption – The growth of its services across select sub-Saharan African countries remains a key strategic focus for the business, although travel to these countries has not been possible since the lockdown began Valua uatio tion: n: – Despite strong sales growth, valuation left largely unchanged in Q3 Date of investme ment nt Feb 2018 % of EC Inve vested Capital 9% Total Etho hos owne nershi hip 63.8% Current valua uation R164m / 1.03x TMB EC Invested Capital R159m L9M Retur urn +R3m Valuation has been stable in last two quarters

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P o r t f o l i o u p d a t e

Portf tfolio

• lio update

ate: Premi mier er

Premier has benefited from increased sales across its major categories, with strong growth continuing into the new financial year

Date of investme ment nt Feb 2020 % of EC Inve vested Capital 9% Total Etho hos owne nershi hip 12.6% Current valua uation R159m / 0.53x EC Invested Capital R298m Valuation based on Brait share price as at 31 March 2020 of R3.75 per share

Premier is a leading South African FMCG manufacturer offering branded and private label solutions. The business has strong heritage brands in bread, maize meal, wheat flour, feminine hygiene and sugar confectionary

Company ny upda date te: – Premier delivered strong operational performance in its H2 2020 to 31 March 2020 and this has continued into the new financial year with revenue and EBITDA up 11% and 18% respectively for the two months to May 2020 – The business has achieved increased sales across its major categories (bread, wheat & maize milled products and feminine hygiene) and has been a net beneficiary of lower interest rates and fuel costs Impa pact ct of COVID ID-19: 19: – As an FMCG manufacturer providing staple foods, Premier’s products were classified as essential goods during the COVID-19 lockdown period, enabling Premier to continue with full production and operations – However, challenging operating conditions during lockdown resulted in additional costs to incentivise staff, additional health & safety requirements and measures to ensure the supply chain could cope with increased demand and operating restrictions. Outlook: – Management continues to monitor the possible consequences of the virus and is at the forefront of developing operating protocols to prevent and mitigate the potential impact on staff and the business – Given the low revenue growth environment, management remains focused on operational efficiency, cost savings and cash flow generation to drive further deleveraging

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P o r t f o l i o u p d a t e

Portf tfolio

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ate

Date of investme ment nt Dec 2017 % of EC Inve vested Capital 5% Total Etho hos owne nershi hip 24.2% Current valua uation R84m / 0.56x TMB EC Invested Capital R154m L9M Retur urn

• R81m

Date of investme ment nt Oct 2017 % of EC Inve vested Capital 5% Total Etho hos owne nershi hip 29.4% Current valua uation R102m / 0.57x TMB EC Invested Capital R185m L9M Retur urn

• R101m

Primedia is one of the leading South African broadcasting and outdoor advertising businesses

Company ny upda date te: – Advertising spend is highly correlated to GDP, with radio and out-of-home advertising significantly impacted by the decrease in advertising spend since the start of the COVID-19 crisis – As with most global media businesses, Primedia has had to restructure its business to account for the lower advertising revenue – This process has been largely completed resulting in a significantly optimised operating

• base. However, profitability for FY20 will be lower than the previous year

Valua uatio tion: n: – Significant reduction in maintainable EBITDA (due to impact of COVID on advertising

• utlook), together with a lower EV / EBITDA multiple and higher net debt in Q3

valuation

Kevro is the largest supplier of corporate-branded clothing and promotional products in South Africa

Company ny upda date te: – Kevro has been significantly impacted by COVID-19, initially in its supply chain from China at the outset of the pandemic and latterly due to the impact of the lockdown on procurement and demand patterns – The company had also embarked on a consolidation of its distribution centres and a comprehensive IT integration project – The combination of the impact of COVID-19 and issues arising from its integration projects significantly impacted the business’ profitability and valuation Valua uatio tion: n: – Significant reduction in maintainable EBITDA plus a decline in the EV / EBITDA multiple and increased net debt due to accrued costs in Q3 valuation

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C O N T E N T S

Introduction Portfolio update

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COVID-19 response

1 2 3 4

Valuation overview

V a l u a t i o n o v e r v i e w

Capital pital Inves ested ed

R1.9bn .9bn

EV / EBITD TDA

(unliste isted) d)

7.0x

EV / EBITD TDA

(Brait ait portfol

• lio bas

ased ed

• n EC shar

are e price ice)

6.2x* x*

Ethos

• s Capital

pital NAVPS @ Brait it NAV (R8. 8.27 27)

R8.91 .91

Ethos

• s Capital

pital NAVPS @ Brait it shar are e price ice (R3. 3.75) 5)

R6.65 .65

Capital pital Inves ested ed

R2.7bn .7bn

# of Portfoli lio

• Compa

panie ies

24 24

EV / EBITD TDA (unli list sted ed)

7.4x

Ethos

• s Capital

pital all-in in Brait it entry ry price ice

R7.99 .99

Ethos

• s Capital

pital NAVPS

R9.94 .94

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Pro ro fo forma at at 31 Dec ecem embe ber 2020 20 – adj djust sted ed fo for Rights ghts Issue and d Brait it inves estm tmen ent At At 31 Mar arch ch 2020 20 COVID ID-19 9 PAND NDEM EMIC IC

Valuation ation overvi view: w: Key metrics ics

* 5.2x equivalent of EC’s unlisted portfolio

Unlisted portfolio ↓17% Brait portfolio ↓ 54%

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V a l u a t i o n o v e r v i e w

Moveme ement nt in portf tfolio io valuation ation in quarter ter ended 31 March ch 2020 20

COVID-related devaluations of c.R831m

DISCLAIMER

THE INFORMATION CONTAINED HEREIN IS PROVIDED FOR INFORMATIONAL AND DISCUSSION PURPOSES ONLY AND IS NOT, AND MAY NOT BE RELIED ON IN ANY MANNER AS, LEGAL, TAX OR INVESTMENT ADVICE OR AS AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY A LIMITED PARTNERSHIP INTEREST IN ANY ETHOS

• FUNDS. A PRIVATE OFFERING OF INTERESTS IN THE FUNDS WILL ONLY BE MADE PURSUANT TO A CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM (THE “OFFERING MEMORANDUM”), THE FUND’S LIMITED PARTNERSHIP AGREEMENT AND SUBSCRIPTION AGREEMENTS, WHICH WILL BE FURNISHED TO QUALIFIED INVESTORS ON A

CONFIDENTIAL BASIS AT THEIR REQUEST FOR THEIR CONSIDERATION IN CONNECTION WITH SUCH OFFERING AND WILL BE SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN SUCH DOCUMENTS. THE INFORMATION CONTAINED HEREIN WILL BE QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE OFFERING MEMORANDUM, WHICH CONTAINS ADDITIONAL INFORMATION ABOUT THE INVESTMENT OBJECTIVE, TERMS AND CONDITIONS OF AN INVESTMENT IN THE FUNDS AND ALSO CONTAINS TAX INFORMATION AND RISK DISCLOSURES THAT ARE IMPORTANT TO ANY INVESTMENT DECISION REGARDING THE FUNDS. INTERESTS IN THE FUND WILL ONLY BE OFFERED TO INVESTORS WHO (A) ARE “ACCREDITED INVESTORS” AS DEFINED IN REGULATION D UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, “QUALIFIED PURCHASERS” UNDER THE U.S. INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND “QUALIFIED CLIENTS” UNDER THE U.S. INVESTMENT ADVISERS ACT OF 1940,AS AMENDED; (B) WITHIN THE EUROPEAN ECONOMIC AREA WOULD FALL WITHIN THE CATEGORY OF "PROFESSIONAL CLIENT” AS THAT TERM IS DEFINED IN THE MARKETS IN FINANCIAL INSTRUMENTS DIRECTIVE 2014/65/EU; AND (C) WITHIN THE UNITED KINGDOM WOULD FALL WITHIN THE CATEGORY OF A “PROFESSIONAL CLIENT” AS THAT TERM IS DEFINED IN THE MARKETS IN FINANCIAL INSTRUMENTS DIRECTIVE 2014/65/EU. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THIS DOCUMENT DOES NOT CONSTITUTE AN INVITATION OR INDUCEMENT OF ANY SORT TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH AN INVITATION OR INDUCEMENT IS NOT PERMITTED OR WHERE WE ARE NOT QUALIFIED TO MAKE SUCH INVITATION OR

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NO PERSON HAS BEEN AUTHORISED TO MAKE ANY STATEMENT CONCERNING THE FUNDS OTHER THAN AS SET FORTH IN THE OFFERING MEMORANDUM AND ANY SUCH STATEMENTS, IF MADE, MAY NOT BE RELIED UPON. THE INFORMATION CONTAINED HEREIN MUST BE KEPT STRICTLY CONFIDENTIAL AND MAY NOT BE REPRODUCED OR REDISTRIBUTED IN ANY FORMAT WITHOUT THE APPROVAL OF THE FUNDS. NOTWITHSTANDING THE FOREGOING, EACH INVESTOR AND PROSPECTIVE INVESTOR (AND EACH EMPLOYEE, REPRESENTATIVE, OR OTHER AGENT THEREOF) MAY DISCLOSE TO ANY AND ALL PERSONS, WITHOUT LIMITATION OF ANY KIND, THE TAX TREATMENT AND TAX STRUCTURE OF THE FUNDS AND ITS INVESTMENTS AND ALL MATERIALS OF ANY KIND (INCLUDING OPINIONS OR OTHER TAX ANALYSES) THAT ARE PROVIDED TO SUCH INVESTOR OR PROSPECTIVE INVESTOR RELATING TO SUCH TAX TREATMENT AND TAX STRUCTURE, PROVIDED, HOWEVER, THAT SUCH DISCLOSURE SHALL NOT INCLUDE THE NAME (OR OTHER IDENTIFYING INFORMATION NOT RELEVANT TO THE TAX STRUCTURE OR TAX TREATMENT) OF ANY PERSON AND SHALL NOT INCLUDE INFORMATION FOR WHICH NON DISCLOSURE IS REASONABLY NECESSARY IN ORDER TO COMPLY WITH APPLICABLE SECURITIES LAWS. AN INVESTMENT IN THE FUNDS WILL INVOLVE SIGNIFICANT RISKS, INCLUDING THE LOSS OF THE ENTIRE INVESTMENT, DUE TO, THE NATURE OF ITS INVESTMENTS. THE FUNDS WILL BE ILLIQUID, AS THERE IS NO SECONDARY MARKET FOR INTERESTS IN THE FUNDS AND NONE IS EXPECTED TO DEVELOP. RESTRICTIONS APPLY TO TRANSFERS AND WITHDRAWALS OF INTERESTS IN THE FUNDS, AND THE INVESTMENT PERFORMANCE OF THE FUNDS MAY BE VOLATILE. THE FEES AND EXPENSES CHARGED IN CONNECTION WITH AN INVESTMENT IN THE FUNDS MAY BE HIGHER THAN THE FEES AND EXPENSES OF OTHER INVESTMENT ALTERNATIVES AND MAY OFFSET

• PROFITS. BEFORE DECIDING TO INVEST IN THE FUNDS, PROSPECTIVE INVESTORS SHOULD READ THE OFFERING MEMORANDUM AND PAY PARTICULAR ATTENTION TO THE INVESTMENT CONSIDERATIONS CONTAINED IN THE OFFERING MEMORANDUM. INVESTORS SHOULD HAVE THE FINANCIAL ABILITY AND WILLINGNESS TO ACCEPT

THE RISK CHARACTERISTICS OF THE FUNDS’ INVESTMENTS. IN CONSIDERING ANY PERFORMANCE DATA CONTAINED HEREIN, YOU SHOULD BEAR IN MIND THAT PAST OR TARGETED PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS, AND THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL ACHIEVE COMPARABLE RESULTS OR THAT TARGET RETURNS WILL BE MET. IN ADDITION, THERE CAN BE NO ASSURANCE THAT UNREALISED INVESTMENTS WILL BE REALISED AT THE VALUATIONS SHOWN AS ACTUAL. REALISED RETURNS WILL DEPEND ON, AMONG OTHER FACTORS, FUTURE OPERATING RESULTS, THE VALUE OF THE ASSETS AND MARKET CONDITIONS AT THE TIME OF DISPOSITION, ANY RELATED TRANSACTION COSTS, AND THE TIMING AND MANNER OF SALE, ALL OF WHICH MAY DIFFER FROM THE ASSUMPTIONS ON WHICH THE VALUATIONS CONTAINED HEREIN ARE BASED. THE INTERNAL RATE OF RETURNS (THE “IRRS”) ARE PRESENTED ON A “GROSS” BASIS DO NOT REFLECT ANY MANAGEMENT FEES, CARRIED INTEREST, TAXES AND ALLOCABLE EXPENSES BORNE BY INVESTORS, WHICH IN THE AGGREGATE MAY BE SUBSTANTIAL. ALL IRRS PRESENTED ARE ANNUALISED AND CALCULATED ON THE BASIS OF MONTHLY INVESTMENT INFLOWS AND OUTFLOWS. NOTHING CONTAINED HEREIN SHOULD BE DEEMED TO BE A PREDICTION OR PROJECTION OF FUTURE PERFORMANCE OF THE FUNDS. PROSPECTIVE INVESTORS SHOULD MAKE THEIR OWN INVESTIGATION AND EVALUATION OF THE INFORMATION CONTAINED HEREIN. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN ATTORNEY, BUSINESS ADVISER AND TAX ADVISER AS TO LEGAL, BUSINESS, TAX AND RELATED MATTERS CONCERNING THE INFORMATION CONTAINED HEREIN. EXCEPT WHERE OTHERWISE INDICATED HEREIN, THE INFORMATION CONTAINED HEREIN IS BASED ON MATTERS AS THEY EXIST AS OF THE DATE OF PREPARATION OF THIS DOCUMENT AND NOT AS OF ANY FUTURE DATE. THE INFORMATION PROVIDED HEREIN WILL NOT BE UPDATED OR OTHERWISE REVISED TO REFLECT INFORMATION THAT SUBSEQUENTLY BECOMES AVAILABLE, OR CIRCUMSTANCES EXISTING OR CHANGES OCCURRING AFTER THE DATE HEREOF. CERTAIN INFORMATION CONTAINED IN THIS DOCUMENT CONSTITUTES “FORWARD-LOOKING STATEMENTS, ”WHICH CAN BE IDENTIFIED BY THE USE OF FORWARD- LOOKING TERMINOLOGY SUCH AS “MAY,” “WILL,” “SHOULD,” “EXPECT,” “ANTICIPATE,” “TARGET,” “PROJECT,” “ESTIMATE,” “INTEND,” “CONTINUE” OR “BELIEVE,” OR THE NEGATIVES THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY. DUE TO VARIOUS RISKS AND UNCERTAINTIES, ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY FROM THOSE REFLECTED OR CONTEMPLATED IN SUCH FORWARD-LOOKING STATEMENTS. DUE TO VARIOUS RISKS AND UNCERTAINTIES, INCLUDING THOSE SET FORTH UNDER “RISK FACTORS” AND“ POTENTIAL CONFLICTS OF INTEREST” IN THE OFFERING MEMORANDUM, ACTUAL EVENTS OR RESULTS OR THE ACTUAL PERFORMANCE OF THE FUND MAY DIFFER MATERIALLY FROM THOSE REFLECTED OR CONTEMPLATED IN SUCH FORWARD-LOOKING STATEMENTS. ETHOS, THE FUND AND ITS GENERAL PARTNER AND THEIR RESPECTIVE AFFILIATES BELIEVE THAT SUCH STATEMENTS AND INFORMATION ARE BASED UPON REASONABLE ESTIMATES AND ASSUMPTIONS. HOWEVER, FORWARD-LOOKING STATEMENTS AND INFORMATION ARE INHERENTLY UNCERTAIN AND ACTUAL EVENTS OR RESULTS CAN AND WILL DIFFER FROM THOSE PROJECTED. THEREFORE, UNDUE RELIANCE SHOULD NOT BE PLACED ON SUCH FORWARD-LOOKING STATEMENTS AND INFORMATION. A PRIVATE OFFERING OF INTERESTS IN THE FUNDS WILL ONLY BE MADE PURSUANT TO A CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM AND THE FUNDS’ SUBSCRIPTION DOCUMENTS, WHICH WILL BE FURNISHED TO QUALIFIED INVESTORS ON A CONFIDENTIAL BASIS AT THEIR REQUEST FOR THEIR CONSIDERATION IN CONNECTION WITH SUCH OFFERING. THE INTERESTS IN ANY FUTURE FUND OR INVESTMENT VEHICLE SPONSORED BY ETHOS WILL NOT BE APPROVED OR DISAPPROVED BY ANY SECURITIES REGULATORY AUTHORITY OF ANY U.S. STATE, BY THE U.S. SECURTIES AND EXCHANGE COMMISSION, OR ANY SIMILAR AUTHORITY IN ANOTHER JURISDICTION, AND ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENCE. CERTAIN INFORMATION CONTAINED IN THIS DOCUMENT IS BASED ON OR DERIVED FROM INFORMATION PROVIDED BY INDEPENDENT THIRD-PARTY SOURCES. ETHOS BELIEVES THAT SUCH INFORMATION IS ACCURATE AND THAT THE SOURCES FROM WHICH IT HAS BEEN OBTAINED ARE RELIABLE. ETHOS CANNOT GUARANTEE THE ACCURACY OF SUCH INFORMATION, HOWEVER, AND HAS NOT INDEPENDENTLY VERIFIED THE ASSUMPTIONS ON WHICH SUCH INFORMATION IS BASED. THIS DOCUMENT IS BEING PROVIDED ON A CONFIDENTIAL BASIS. ACCORDINGLY, IT MAY NOT BE REPRODUCED IN WHOLE OR IN PART, AND MAY NOT BE DELIVERED TO ANY PERSON WITHOUT ETHOS’ PRIOR WRITTEN CONSENT.